f10q0310a1_jbi.htm

10-Q/A 1 f10q0310a1_jbi.htm FORM 10-Q/A f10q0310a1_jbi.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q /A

(Amendment No. 1)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD

ENDED MARCH 31, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD: From ______________to ________________

000-52444

JBI, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-4924000
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1783 Allanport Road

Thorold, Ontario L0S 1K0

(Address of principal executive offices)

Copies of communications to:

Gregg E. Jaclin, Esq.

Anslow + Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

(732) 409-1212

Registrant’s telephone number, including area code: (905) 384-4383

Securities to be registered under Section 12(b) of the Act: None

Securities to be registered under Section 12(g) of the Act:

Title of each class to be so registered

Common stock, par value $.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Non-accelerated filer o

Accelerated filer o

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes o No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As at July 13, 2010, there were 50,597,229 shares of Common Stock, $0.001 par value per share issued and outstanding.

Documents Incorporated By Reference –None

JBI, INC.

Index			Page

Part I.	Financial Information
	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets – March 31, 2010 (Unaudited) and December 31, 2009	5

		Condensed Consolidated Statements of Operations – Three Month Periods Ended March 31, 2010 and 2009 (Unaudited)	6

		Condensed Consolidated Statements of Changes in Shareholders’ Equity - Three Month Period Ended March 31, 2010 (Unaudited)	7

		Condensed Consolidated Statements of Cash Flows – Three Month Periods Ended March 31, 2010 and 2009 (Unaudited)	8

		Notes to Condensed Consolidated Financial Statements (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19

	Item 4.	Controls and Procedures	19

Part II.	Other Information

	Item 1.	Legal Proceedings	21

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

	Item 3.	Defaults Upon Senior Securities	21

	Item 4.	(Removed and Reserved)	21

	Item 5.	Other Information	21

	Item 6.	Exhibits	21

Signatures			23

Introductory Note: Caution Concerning Forward-Looking Statements

This Form 10-Q Report and the Company’s other communications and statements may contain “forward-looking statements,” including statements about the Company’s beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company’s control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. The Company’s actual future results may differ materially from those set forth in its forward-looking statements. For information concerning these factors and related matters, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Report, and the following sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009: (a) “Risk Factors” in Part I, and (b) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II. However, other factors besides those referenced could adversely affect the Company’s results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Report. The Company does not undertake to update any forward-looking statement, except as required by law.

Unless the context otherwise indicates, all references in this report to the “Company,” “JBI,” “we,” “us,” or “our,” or similar words are to JBI, Inc. and its subsidiaries.

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

March 31, 2010 and December 31, 2009

ASSETS
	2010			2009
CURRENT ASSETS
Cash and cash equivalents	$	2,448,662		$	26,307
Cash held in attorney trust account		150,631			3,123,595
Accounts receivable, net		2,088,910			1,662,202
Inventories		1,029,324			1,414,813
Prepaid expenses		119,341			51,549


TOTAL CURRENT ASSETS		5,836,868			6,278,466

PROPERTY AND EQUIPMENT
Leasehold improvements		481,773			473,609
Machinery and office equipment		1,220,249			572,295
Vehicles		12,325			12,325
Furniture and fixtures		17,679			17,679
		1,732,026			1,075,908
Less accumulated depreciation and amortization		(169,544	)		(101,120	)

NET PROPERTY AND EQUIPMENT		1,562,482			974,788

OTHER ASSETS

Restricted Cash		144,500			144,500
Other Assets		194,234			64,116
Deposits		9,420			10,014
Goodwill		5,179,249			5,179,249

TOTAL OTHER ASSETS		5,527,403			5,397,879

TOTAL ASSETS	$	12,926,753		$	12,651,133


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,377,472		$	1,066,949
Accrued expenses		203,290			225,420
Income taxes payable		159,661			159,661
Deferred income taxes		60,903			60,903

TOTAL CURRENT LIABILITIES		1,801,326			1,512,933



EQUITY
Common Stock, par $0.001; 150,000,000 authorized, 50,018,450
and 69,453,840 issued and outstanding at March 31, 2010
and December 31, 2009, respectively		50,019			69,454
Common Stock Subscribed, 100,000 and 1,022,410 shares at cost at
March 31, 2010 and December 31, 2009 respectively		80,000			817,928
Stock subscriptions receivable		(80,000	)		(817,928	)
Preferred stock, par $0.001; 5,000,000 authorized, 1,000,000 issued and
outstanding at March 31, 2010 and December 31, 2009		1,000			1,000
Additional Paid in Capital		16,680,303			13,377,032
Accumulated deficit		(5,605,895	)		(2,309,286	)


		11,125,427			11,138,200

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,926,753		$	12,651,133

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Month Periods Ended March 31, 2010 and 2009


	2010			2009

NET SALES
Pak-It	$	1,552,737		$	-
Javaco		1,994,573			-
Other		26,120			-
		3,573,430			-
COST OF SALES
Pak-It		1,534,036			-
Javaco		1,721,007			-
Other		5,183			-
		3,260,226			-

GROSS PROFIT		313,204			-

OPERATING EXPENSES
Compensation Paid in Stock		2,369,900			-
Other Operating Expenses		1,262,231			4,056

TOTAL OPERATING EXPENSES		3,632,131			4,056

LOSS FROM OPERATIONS		(3,318,927	)		(4,056	)


OTHER INCOME (EXPENSE)
Interest expense, net		(1,825	)		-
Other income (expense), net		24,143			-

OTHER INCOME (EXPENSE), NET		22,318			-


LOSS BEFORE INCOME TAXES		(3,296,609	)		(4,056	)


INCOME TAX PROVISION		-			-


NET LOSS	$	(3,296,609	)	$	(4,056	)

Basic & diluted net loss per share	$	(0.052	)	$	(0.000	)

Weighted average number of common shares outstanding		63,673,210			63,700,000

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Three Month Period Ended March 31, 2010





	Common Stock						Common Stock						Stock			Preferred Stock				Additional					Total
	$0.001 Par Value						Subscribed						Subscriptions			$0.001 Par Value				paid in		Retained			Shareholders'
	Shares			Amount			Shares			Amount			Receivable			Shares		Amount		Capital		Earnings			Equity

BALANCE - DECEMBER 31, 2009		69,453,840		$	69,454			1,022,410		$	817,928		$	(817,928	)		1,000,000	$	1,000	$	13,377,032	$	(2,309,286	)	$	11,138,200

Common stock retired		(21,000,000	)		(21,000	)		-			-			-			-		-		21,000		-			-

Shares issues for compensation		404,700			405																2,369,495					2,369,900

Shares issued and subscribed for in connection with private placement, $0.80 per share, net of issuance costs of $13,992		1,259,910			1,160			(922,410	)		(737,928	)		737,928			-		-		912,776		-			913,936

Net loss		-			-			-			-			-			-		-		-		(3,296,609	)		(3,296,609	)

Balance - March 31, 2010		50,118,450		$	50,019			100,000		$	80,000		$	(80,000	)		1,000,000	$	1,000	$	16,680,303	$	(5,605,895	)	$	11,125,427

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Month Periods Ended March 31, 2010 and 2009




	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,296,609	)	$	(4,056	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		69,018			-
Provision for uncollectible accounts		53,000			-
Common shares issued for services		2,369,900			-
Changes in:
Accounts receivable		(479,708	)		-
Inventories		385,489			-
Prepaid expenses, deposits and other		(197,910	)		-
Accounts payable and accrued expenses		288,393			250

NET CASH USED IN OPERATING ACTIVITIES		(808,427	)		(3,806	)


CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in cash held in attorney trust account		2,972,964			-
Acquisition of property and equipment, net		(656,118	)		-

NET CASH PROVIDED BY INVESTING ACTIVITIES		2,316,846			-

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		927,928			-
Direct offering costs		(13,992	)		-

NET CASH PROVIDED BY FINANCING ACTIVITIES		913,936			-


NET CHANGE IN CASH AND CASH EQUIVALENTS		2,422,355			(3,806	)


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		26,307			3,806


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,448,662		$	-

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTANTION

These consolidated financial statements include the accounts of the JBI, Inc. and its wholly owned subsidiaries, Javaco, Inc., Pak-It, LLC, JBI (Canada), Inc., JBI RE #1, Inc., JBI RE One, Inc., Plastic2Oil Land, Inc. and Plastic2Oil Marine, Inc. (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q of the Securities and Exchange Commission (the “Commission”). Accordingly, certain information and footnote disclosures required in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. Interim statements are subject to possible adjustment in connection with the annual audit of the Company’s accounts for the year ended December 31, 2010. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all necessary adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for the fair presentation of the Company’s consolidated financial position as of March 31, 2010 and the results of its operations, cash flows and changes in stockholders’ equity for the three month periods ended March 31, 2010 and 2009. Results for the three months ended are not necessarily indicative of results that may be expected for the entire year. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto as of and for the year ended December 31, 2009 as included in the Company’s Form 10-K/A as filed with the commission on July 9, 2010.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company has disclosed its significant accounting policies in “Note 2: Significant Accounting Policies” in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009. The following significant accounting policies provide an update to those included under the same captions in the Company’s Annual Report on Form 10-K/A.

Estimates

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to Goodwill, the value of assets and liabilities acquired, valuation of inventory, and the allowance for uncollectible accounts receivable. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Impairments

If the carrying value of an asset, including goodwill and identifiable intangible assets exceeds the sum of estimated undiscounted future cash flows, an impairment loss is recognized for the difference between estimated fair value and carrying value. Management assesses assets for recoverability at least annually, or whenever changes in circumstances indicate that an asset’s carrying amount may not be recoverable

Goodwill

Goodwill resulted primarily from business acquisitions. In accordance with accounting rules, goodwill is not amortized, but is subject to an annual impairment test, which the Company performs in the 4th quarter. The Company evaluates the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value. The Company does not believe that the current quarter operating loss has a negative impact on the current Goodwill valuation.

Accounts Receivable

Accounts receivable represents unsecured obligations due from customers under terms requesting payments upon receipt of invoice up to ninety days, depending on the customer. Accounts receivable are non-interest bearing and are stated at the amounts billed to the customer net of an allowance for uncollectible accounts. Customer balances with invoices over 90 days old are considered delinquent. Payments of accounts receivable are allocated to the specific invoices identified on the customer remittance, or if unspecified, are applied to the earliest unpaid invoice.

The allowance for uncollectible accounts reflects management’s best estimate of amounts that may not be collected based on an analysis of the age of receivables and the credit standing of individual customers. Accounts receivable determined to be uncollectible are recognized using the allowance method. The allowance for uncollectible accounts at March 31, 2010 was $112,000 and $59,000 at December 31, 2009.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Earnings Per Share

The financial statements include basic and diluted per share information. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of March 31, 2010.

Research and Development

All research, development, and engineering costs are expensed when incurred.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature.

Recent Accounting Pronouncement

Improving Disclosures about Fair Value Measurements (Accounting Standards Update 2010-06)

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements,” to require additional disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The standard also clarifies existing disclosures about the level of disaggregation, valuation techniques and inputs to fair value measurements. As this standard only affects disclosures related to fair value, the adoption of this standard did not have a material effect on the Company’s consolidated balance sheets, results of operations, or cash flows.

NOTE 3 – EQUITY TRANSACTIONS

Through January 14, 2010, the Company consummated a confidential private placement with certain accredited investors for the issuance and sale of 8,439,893 shares of the common stock. The offering was at $0.80 and the gross proceeds received by the Company were $6,751,914. The total shares issued pursuant to the offering was 8,439,893. As a result of the private placement the Company paid all debt (except normal recurring accounts payable and accruals) and added in excess of $3.1 million in available cash.

The Company issued 404,700 shares as compensation during the quarter. Of these, 4,700 were issued to employees of Pak-It, 100 shares per employee, on January 7, 2010. On February 25, 2010, the Company issued a total of 400,000 shares to 5 key employees and consultants as bonuses and for past services. All shares were valued at the closing share price on the respective issue dates and were reported as operating expenses in the statement of operations.

NOTE 4 – BUSINESS COMBINATIONS

During 2009, the Company acquired Javaco and Pak-It, and had completed internal valuations to support the allocation of the purchase price and the enterprise value of the entities. The Company expects to have third party valuations done on the subsidiaries of Javaco and Pak-It during 2010 but management does not expect the valuations to be materially different from those previously performed by Management. Any difference will be adjusted when the valuations are completed and recorded as a current period charge as needed.

NOTE 5 – SEGMENT REPORTING

During the quarter, the Company had three principal operating segments, Data, Pak-It, and Javaco.

These operating segments were determined based on the nature of the products and services offered. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company’s chief executive officer has been identified as the chief operating decision maker, and directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company evaluates performance based on several factors, of which the primary financial measure is net income. The accounting policies of the business segments are the same as those described in “Note 2: Summary of Significant Accounting Policies.” Intersegment sales are accounted for at fair value as if sales were to third parties. The following tables show the operations of the Company’s reportable segments for the three months ended March 31, 2010:

	JBI (P2O and Data)			Pak-It			Javaco		Total

Net sales	$	26,120		$	1,552,737		$	1,994,573	$	3,573,430
Net income/ (loss)	$	(2,709,931	)	$	(644,867	)	$	58,189	$	(3,296,609	)
Total assets	$	2,938,069		$	5,573,873		$	4,414,811	$	12,926,573
Accounts receivable	$	-		$	624,643		$	1,464,267	$	2,088,910
Inventories	$	-		$	585,305		$	444,019	$	1,029,324

Information as to the Company’s quarterly sales in different geographical areas is as follows:

Net Sales:
United States	$	2,267,429
Mexico		454,114
Peru		502,656
Costa Rica		349,231
	$	3,573,430

Sales are attributable to geographic areas based on location of customer. Neither the Company nor any of its segments depends on any single customer, small group of customers, or government for more than 10% of its sales.

Also, because a substantial portion of the Company’s sales are derived from the sales of product manufactured in the United States, long-lived assets located outside the United States are less than 10%.

Segment information for the three months ended March 31, 2009 was not significant to the financial statements.

NOTE 6 – RELATED PARTY TRANSACTIONS

The President and CEO returned 21 million shares of Common stock in March 2010.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

The Company is not a party to any legal proceedings, there are no known judgments against the Company, nor are there any known actions or suits filed or threatened against it or its officers and directors, in their capacities as such. We are not aware of any claims against the Company or any reputed claims against it at this time except for claims of two former employees of the Pak-It subsidiary. These former employees have alleged that certain monies are due them pursuant to their employment agreements and the Company has retained legal counsel to handle the claims. The amounts of the claims are deemed immaterial to the Company.

The Company signed and Area Development Agreement in February with AS PTO, LLC. This agreement is contingent upon the issuance of an air permit for the Company’s P2O processor in New York. Failure to obtain the air permit makes the agreement null and void.

The Company has employment agreements with its officers and key employees that provide for minimum compensation and severance payments due upon termination.

NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date and has identified the following:

In May, 2010 the Company formed a wholly-owned New York limited liability company, Plastic2Oil of NY #1, LLC, to operate the P2O operations and R&D functions at the Niagara Falls, NY facility.

In May, 2010, the Company consummated a confidential private placement with certain accredited investors for the issuance and sale of 1,000,000 shares of common stock, $0.001 par value per share at per share price of $4.00. The gross proceeds received by the Company in the amount of $1,915,116 for the sale of 478,779 shares will be utilized for the implementation of the Company’s business plan regarding commercial deployment of the P2O process in the U.S., Canada and Europe.

In May, the Board of Directors approved compensation for its independent members. Compensation includes the one-time issuance of restricted stock and annual stock options for which the strike price will be set each year.

On May 19, 2010, the Company executed an Employment Agreement with CEO John Bordynuik which takes effect upon issuance of an air permit for the Company’s P2O processor. The agreement provides for minimum annual compensation as well as the issuance of stock options contingent upon the achievement of certain milestones, none of which have been met as of July 16, 2009.

On June 17, 2010, the Company purchased a building to be used as a corporate office. The purchase price was $369,769. The Company put $97,308 down and the vendor took back a five-year mortgage for $272,461 at an interest rate of 7%. The mortgage is denominated in Canadian dollars and will fluctuate based on the exchange rate in effect.

On June 29, 2010, the Company was notified by FINRA that the Company stock was not eligible for quotation on and would be removed from the OTC Bulletin Board, due to its delinquency in filing this Form 10-Q.

In July 2010, the Company closed the Cambridge, Massachusetts office space that formerly served as the main corporate address. The decision was made to not renew the lease which expires at the end of August in order to minimize expenditures. The new corporate address is 1783 Allanport Road, Thorold, Ontario, Canada L0S 1K0.

On July 21, 2010, the Company received notice that its application for its stock to be quoted on the OTCQX marketplace had been accepted. The Company subsequently was notified by the OTCQX that such quotation could not commence until removal of the “E” from its ticker symbol occurred. On August 5, 2010 FINRA hearing officer issued a decision stating that the Company’s securities were ineligible for continued quotation on the OTC Bulletin Board due to the late filing of its first quarter Form 10-Q. The “E” was removed from the Company’s ticker symbol on August 6, 2010. The Company believes that quotation of its stock on the OTCQX will commence in the near future.

On September 17, 2010, the Company received results from the stack test performed by Conestoga-Rovers & Associates (“CRA”) on August 17, 2010. The test was performed on the Company’s 20 metric-ton processor and was witnessed by the New York Department of Environmental Conservation (“NYDEC”). CRA's results indicate that the processor is emitting 14.87% oxygen to the stack, while only emitting 3.16 ppm (parts per million) of carbon monoxide, 0.81 lb/hr (86.4 ppm) of NOx, SO2 and THC were below 1 ppm, particulates tested below 0.02 lb/hr. In other words, the process puts a high percentage of oxygen back into the air while emitting very little, if any, toxic substances during the conversion of waste plastic into usable hydrocarbon fuels. The stack test confirmed that the P2O processor emissions are considerably below maximum emissions allowed under a NYDEC simple air permit. The stack test also confirmed we do not require a Title V air permit.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Plan of Operations

Overview

Management began executing its business plan in 2009 by acquiring three revenue generating sources in 2009 and concentrating R & D resources on scaling P2O for an anticipated launch in 2010. Detailed summaries of each acquisition and P2O are described in detail below.

Through recruiting efforts and these acquisitions, management believes that it has quickly assembled an experienced team of professionals that will allow the Company to grow both organically (within each subsidiary) and through synergistic acquisitions that have a demonstrated propensity towards being eco-friendly.

The company believes that both private and public entities will see the environmental benefit, positive cost analysis, and potential savings from unnecessary disposal of waste plastic using Plastic2Oil, which will provide incentives for expansion of sites. By offering “green” products and continuing to use its proprietary technologies the Company hopes to create solutions to enormous problems. From Pak-It™ products, where we save fuel by “not shipping water”, to Plastic2Oil where we will create fuel from what is currently a costly plastics disposal problem, the Company believes it is well positioned for growth.

In addition to the management expertise that came with the acquisitions, the Company hired Ronald C. Baldwin, Jr. as CFO and Jacob Smith as COO. These seasoned executives have already identified areas for improvement and have acted to make the acquisitions more profitable.

For instance, on or about January 20, 2010, Pak-It reduced its workforce from 49 to 36 employees as part of a corporate restructuring of the bulk cleaning component of the business. The Company’s Chief Operating Officer, Jacob Smith, is overseeing the transition of the plant from primarily a labor intensive bulk chemical manufacturing company to a highly automated plant focused on production of our line of water soluble chemical Pak-Its. The automation being put in place will allow the Company to operate more efficiently as well as satisfy the production rate necessary to support our national retail launch.

Significant Developments and Strategic Actions

In April 2009, John Bordynuik purchased 63% of the issued and outstanding shares of 310 Holdings on April 24, 2009. Subsequently, John Bordynuik was appointed President and CEO of the Company.

On August 24, 2009, the Company acquired Javaco, Inc.(“Javaco”), for its know-how in world-wide communications and its business experience in Mexico and South America. Management hopes to utilize Javaco’s expertise to launch Plastic2Oil sites in Mexico and South America and to develop a secure communications infrastructure between the Plastic2Oil sites and the Company. Javaco currently distributes over 100 lines of equipment from fiber optic transmitters to RF connectors. To further enhance business in the United States, new distribution lines are frequently being added including a line of home theater and audio video products.

On September 30, 2009, the Company acquired Pak-It, LLC, a Florida limited liability company. Pak-It operates two business units: 1) a bulk chemical processing, mixing, and packaging facility, and 2) a patented delivery system that packages condensed cleaners in small water-soluble packages. The acquisition of Pak-It, LLC was primarily driven by the Company’s desire to access the experience that the Pak-It management team has in chemistry, marketing, sales, operations, and finance. The Pak-It team was used to centralize JBI’s accounting in Clearwater, Florida for controls and reporting. Management intends to utilize the Pak-It team to help grow all of the Company’s business segments, including the Philadelphia plant, which is expected to perform the following:

·	Bulk packaging facility will mix and package the catalyst used in the Plastic2Oil process.

·	Continue to manufacture Pak-It™ water-soluble sachets and assist in setting up Canada operations for manufacturing and sale of Pak-It products in Canada.

·	To sell cleaners using Pak-It technology in the retail market.

The Company has also been focusing on restructuring the Philadelphia plant and revised the business plan for growth into the retail market. Management is going forward with a full retail rollout of Pak-It products. The company engaged Western Creative Inc. on January 12, 2010 to assist in planning and marketing the retail launch. In anticipation of increased demand for product from the retail launch, management is also reconfiguring the plant and updating its equipment.

We also procured a 20 MT (metric ton) Plastic2Oil Processor and are now developing all aspects of the process from procurement, to automated systems of feeding, processing, and collecting oil. IsleChem was engaged by the Company on December 9, 2009 to verify the Company’s Plastic2Oil process. During 40 runs of tests, IsleChem was able to isolate the conditions that allowed the process to run optimally and provide engineering support to gather data to apply for a New York state DEC air permit. IsleChem verified our Plastic2Oil process is scalable and repeatable.

In 2010, the Company assembled its 20T Plastic2Oil processor at its P2O factory in Niagara Falls, NY. The Company purchased a shredder and granulator to preprocess bulk plastic. A complete automation system with 63 sensors was installed on the Plastic2Oil processor for control, data logging, and management. The processor was run to gather operational steady state data for a stack test. Oxygen sensors supplied by a major US sensor manufacturer failed when exposed to the process over time and delayed our permit application process. A number of oxygen sensors were tested until a suitable replacement was found. Sensors on the processor are now functioning properly.

A minor by-product of the process is an off-gas much like natural gas. The process consumes much less off-gas to operate than is generated when operating at maximum capacity. Further testing at high processing rates proved that all the off-gas could not be burned (temporarily for a stack test) in the process furnace. Flaring the excess off-gas is common in the oil and gas industry but is not environmentally friendly, would waste the fuel value, and would require a separate permit. To avoid flaring the excess gas, the Company purchased a gas compression system to buffer and regulate the off-gas to 1) resell or 2) to cold start the process. The gas compression system and mobile storage tanks were installed on the Company’s 20T Plastic2Oil processor in June, 2010.

In May 2010, IsleChem engineered and had manufactured a simple solution to separate diesel and gasoline fractions into separate fuel tanks to remove the gasoline fraction from our diesel-like fuel. IsleChem is presently testing this solution with various plastic feedstock and, if viable, it will be scaled to work on our 20T Plastic2Oil processor. The Company will not delay work and testing for an air permit by waiting for a large scale gas/diesel separator.

On December 22, 2009, the Company and Rick Heddle agreed to a Joint Venture whereby Heddle Marine Service, Inc. will retrofit ships with P2O processors. The Company is now finalizing a JV Agreement for production of its first P2O ship with Heddle. JBI anticipates contracting with various countries to convert their plastic waste into oil. Also, JBI has signed a Letter of Intent for the establishment of an Area Development Agreement (ADA) for 45 P2O sites in the State of Florida with AS PTO, LLC, an entity controlled by Al Sousa of Largo, Florida. Both Heddle and Sousa have strong management capabilities and are expected to be essential to the scaling up of a nationwide P2O launch.

JBI continues to maintain its data recovery and migration business through the use of its tape drives. It currently has a mobile data container that can be deployed to transfer data onsite for customers with highly sensitive data. It acquired tape drives, servers, and the mobile data container through the acquisition of certain assets from John Bordynuik, Inc. The Company has a large backlog of tapes to be migrated and is seeking strategic partnerships with international companies that will allow the Company to realize tape revenues faster, thereby decreasing the backlog.

The Company’s change of auditors and appointment of WithumSmith + Brown, PC as the Company’s new independent registered public accounting firm on May 14, 2010 contributed to a delay in filing the Company’s Form 10-Q for the quarter ended March 31, 2010. As a result of this delay, on approximately May 25, 2010 the FINRA staff notified the Company that it if it did not file this Form 10-Q by June 24, 2010, its common stock would become ineligible for quotation on, and would be removed from, the OTC Bulletin Board. On approximately June 29, 2010, the FINRA staff notified the Company of its determination that its stock was ineligible for such quotation. The Company appealed the FINRA staff’s removal determination to a hearing officer, who has not yet ruled on the appeal. The Company believes that, as of the date of this filing, its stock is again eligible for such quotation, and further believes that a FINRA member firm will file a Form 211 seeking authorization to initiate or resume quotations of the Company’s stock on the OTC Bulletin Board. At this time, the Company does not know whether its stock will continue to be quoted on the OTC Bulletin Board.

Results of Operations

Quarter ended March 31, 2010 compared to March 31, 2009

For the quarter year ended March 31, 2010, we generated $3,573,430 in revenues, and incurred a net loss of $3,296,609, of which $2,369,900 was attributable to shares issued to various JBI Inc. employees as stock compensation. These share issues were expensed by the Company even though they did not cause any dilutive impact for existing shareholders due to the return of 21 million shares to treasury from the CEO's personal shares. We had no significant activity during the quarter ended March 31, 2009.

Revenue Sources

We derive revenues from the sale of bulk cleaning chemicals and patented cleaning solutions in water soluble sachets through our Pak-It subsidiary, which comprised $1.5 million of total revenues during the quarter ended March 31, 2010.

Additionally, we derive revenues through Javaco through the sales and distribution of electronic components marketed in Mexico and Latin America, which comprised $2.0 million of total revenues during the quarter ended March 31, 2010.

Finally, we generate sales through reading high volume legacy data computer tapes for large institutions and corporations. We expect that the commercial launch of Plastic2Oil will result in sales of the product produced by our 20T units.

Operating Expenses

The major source of operating expenses for the quarter was the charge to operations of $2.37 million for the 404,700 shares issued for services and to employees during the quarter.

Expenses for subsidiaries Pak-It and Javaco have been higher than expected in connection with restructuring costs associated with the acquisitions. The Company considers these expenses to be one-time charges.

Stock-Based Compensation

The Company periodically issues shares of common stock for services rendered or for financing costs. Such shares are valued based on the market price on the transaction date.

The Company plans to adopt a formal plan which addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. No such plan had been adopted as of June 25, 2010.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2010, we have approximately $2.6 million cash on hand.

During the quarter the Company purchased property and equipment of $656k principally relating to development of the P2O processor and the automation of the Pak-It facility. The Company expects to make significant investments in property and equipment in the future.

Historically, we have funded our operations through financing activities consisting primarily of private placements of debt and equity securities with existing shareholders and outside investors. Our principal use of funds has been for capital expenditures and general corporate expenses.

We expect to rely upon funds raised from private placements, as well as future equity and debt offerings to implement our growth plan and meet our liquidity needs going forward. Management believes that our Company’s cash will be sufficient to meet our working capital requirements for the next twelve month period at which point further funding will be necessary. However, we cannot assure you that such financing will be available to us on favorable terms, or at all.

Forward-Looking Statements

Critical Accounting Policies, Estimates and Assumptions

The Company believes the following discussion addresses its most critical accounting policies, which are those that are most important to the portrayal of the financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Accounting policies, in addition to the critical accounting policies referenced below, are presented in Note 2 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, “Summary of Accounting Policies.”

Estimates

Inventories

Inventories, which consist primarily of electrical components and chemicals, are stated at the lower of cost or market. The Company uses the first-in, first-out (FIFO) method of determining cost.

Property and Equipment

Property and Equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the various classes of assets as follows:

Leasehold improvements	lesser of useful life or term of the lease
Machinery and office equipment	5-7 years
Vehicles	5 years
Furniture and fixtures	7 years
Office and industrial buildings	25 years

Gains and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred.

Impairments

Goodwill

Goodwill resulted primarily from business acquisitions. In accordance with accounting rules, goodwill is not amortized, but is subject to an annual impairment test, which the Company performs in the 4th quarter. The Company evaluates the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value. The Company’s evaluation of goodwill completed during the year resulted in no impairment losses. The Company does not believe that the current quarter operating loss has a negative impact on the current Goodwill valuation.

Revenue Recognition

Off-Balance Sheet Arrangements

None

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for a Smaller Reporting Company.

Item 4. Controls and Procedures.

Management’s Report on Internal Control over Financial Reporting

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), for the period ended March 31, 2010. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Management’s Discussion of Material Weakness

Management has identified the following groups of control deficiencies, each of which, in the aggregate, represents a material weakness in the Company’s internal control over financial reporting as of March 31, 2010:

	o	Material journal entries identified and recorded as a result of audit procedures
	o o	Restatement of previously issued financial statements Overall ineffective oversight of the financial reporting process including: · Omitted disclosures for related party transactions, loss contingencies and accounting policies. · Controls over accounting for acquisitions. · Timing and proper recording of equity transactions. · Documentation of material transactions related to acquisitions.

Changes in Internal Controls Over Financial Reporting

The Company has continued to take remediation steps described below to enhance its internal control over financial reporting and reduce control deficiencies. We believe the steps taken below to enhance our internal controls over financial reporting has reduced has reduced our deficiencies but have not completely eliminated them. We will continue to work on the elimination of control weaknesses and deficiencies noted.

Management of the Company takes very seriously the strength and reliability of the of the internal control environment for the Company. During the period ended March 31, 2010, the Company has implemented internal policies and intends to undertake additional steps necessary to improve the control environment that include:

	o	The Company has implemented an internal disclosure policy to govern the disclosure of material, non-public information in a manner designed to provide full and fair disclosure of information about the Company. This disclosure policy is intended to ensure that management and employees of the Company comply with applicable laws including the U.S, Securities Exchange Commission (“SEC”) Fair Disclosure Rules (Regulation FD) governing disclosure of material, non-public information to the public.
	o o o	Strengthening the effectiveness of corporate governance by hiring a new CFO and establishing an audit committee of the Board. Engaging a non-independent PCAOB registered accounting firm to provide accounting advice to Management. Assigning additional members of the Management team to assist in preparing and reviewing the ongoing financial reporting process.

Management acknowledges its responsibility for internal controls over financial reporting and seeks to continually improve these controls. In order to achieve compliance with Section 404 of the Sarbanes Oxley Act, we are performing system and process documentation and evaluation needed to comply with Section 404, which is both costly and challenging. We believe our process for documenting, evaluating and monitoring our internal control over financial reporting is consistent with the objectives of Section 404 of the Act.

Part II OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any legal proceedings, there are no known judgments against the Company, nor are there any known actions or suits filed or threatened against it or its officers and directors, in their capacities as such. We are not aware of any claims against the Company or any reputed claims against it at this time except for claims of two former employees of the Pak-It subsidiary. These former employees have alleged that certain monies are due them pursuant to their employment agreements and the Company has retained legal counsel to handle the claims. The amounts of the claims are deemed immaterial to the Company.

Item 1A. Risk Factors

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our annual report on Form 10-K/A for the year ended December 31, 2009, filed with the SEC on July 9, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

None.

Item 5. Other Information

The Employment Agreement between the Company and John Bordynuik, originally executed on May 19,2010, was amended on July 13, 2010, to correct the employment term of five years from the effective date and to change the vesting of the first tranche of 100,000 options issuable to Mr. Bordynuik upon the Company receiving full DEC approval for its P2O processor.

Item 6. Exhibits.

2.1		Securities Purchase Agreement between 310 Holdings, Inc. and Domark International, Inc. (Incorporated by reference to Form 8-K filed on August 28, 2009).
3.1		Amended Articles of Incorporation (Incorporated by reference to Form 8-K filed on October 6, 2010)
3.2		Bylaws (Incorporated by reference to the Form. SB2 filed with the Securities and Exchange Commission on December 11, 2006.)
10.1		Asset Purchase Agreement *
10.2		Unit Purchase Agreement by and among 310 Holdings, Inc., Pak-It, LLC and the Pak-It, LLC Unitholders**
10.3		Loan Agreement**
10.4		Pledge Escrow Agreement**
10.5		Security Agreement Inventory**
10.6		Security Agreement Equipment**
10.7		Security Agreement Accounts, General Intangibles, Contract Rights**
10.8		$1,200,000 Note**
10.9		$2,665,000 Liability Note**
10.10		Stock Purchase Agreement (incorporated by reference to Form 8-K filed on July 1, 2009)
21.1		JBI RE ONE Inc., an Ontario, Canada corporation
21.2		Plastic2Oil Land, Inc., a Nevada corporation
21.3		Plastic2Oil Marine, Inc. a Nevada corporation
21.4		PAK-IT, LLC a Florida corporation
21.5		Javaco, Inc., an Ohio corporation
21.6		Plastic2Oil of NY #1, LLC a New York corporation
21.7		JBI RE #1, Inc., a New York corporation
21.8		JBI (Canada), Inc., an Ontario, Canada corporation

(a) Exhibits

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

32.1		Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350.

32.2		Certification of Chief Financial Officer Pursuant to 18 U. S. C. Section 1350.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JBI, INC.

Date: October 20, 2010	By:	/s/ John Bordynuik
		Name: John Bordynuik
		Title: President, CEO, Director (Principal Executive Officer)

	By:	/s/ Ron Baldwin, Jr.
		Name: Ron Baldwin, Jr.
		Title: Chief Financial Officer (Principal Financial Officer)